Welcome to the newest New York Real Estate Update from The
Brooklyn Made Show.

This month we’ve seen some big trends and real estate moves in
play, and see the market preparing for the peak spring and summer
home buying season.

In the commercial real estate headlines

Rents don’t appear to be faring well in New York City this year.
What looked like it may have been only a period of seasonal
softness, appears to have been extended. All market segments are
unique, but asking prices are down, rents are down, and
negotiability and concessions are up. This may be an extension of
the winter due to ongoing poor weather. Things could spring into
action over the next few months and catch up after this correction.
Though we may just have to wait and see.

Retail property landlords seem to be especially feeling the
pinch this season. Retail rents fell 20% in the first 3 months of
2018. That’s after Manhattan rents fell to their lowest level in 17
years in 2017. Over 209 ground floor rent spaces are on the market,
being actively advertised.

Some investors and retailers are taking advantage of this. While
Toys R Us and Michael Kors are closing stores, TJ Maxx expanded
with the first quarter’s biggest deal at 18,000 square feet on West
57th St. Mango signed the second most expensive lease for 19,000
square feet on Broadway in SoHo according to
BisNow. Forever 21 has also announced it is signing a five year
lease for 43,000 square feet at 435 Seventh Ave.

Investment activity has still been strong, but not though
yesterday’s common channels.
The Real Deal reports that investors have been shunning real
estate stocks and publicly traded REITs, despite the fact they are
trading with discounts as deep as 16.4% below the value of their
assets. Instead investors are plowing far more capital into direct
investment and private real estate funds. These funds had
accumulated $1.2T in real estate by the beginning of 2017, and
attracted $71B in new capital over the last year.

Brookfield just bought seven retail storefronts on Bleecker
Street in April, where it wants to test out new retail
concepts.

While apartment rents in New York have fluctuated as well, there
doesn’t appear to be a lot of hope for those looking for affordable
housing today.

According to the Department of Housing and Urban Development
(HUD) residents are considered rent burdened if they have to pay
30% of their gross monthly income for housing and utility payments.
Those who pay 50% or more of their income towards these housing
expenses are considered extremely cost burdened. Yet, a report from
6sqft reveals that hundreds of
Section 8 tenants are shelling out as much as 80% of their
income for rent each month, or more.

New rules could also mean that Section 8 renters have to cough
up even more of their own cash to pay for housing. The same goes
for those living in New York’s rent stabilized housing.
Brownstoner says that efforts to make renters less reliant on
government housing subsidies could see housing costs triple under
new legislation.

In mid-April, the
New York Rent Guidelines Board voted to allow landlords to hike
rents on stabilized apartments by up to 3.75%. That’s only around
half of what the landlords’ Rent Stabilization Association asked
for. Yet, far more than the rent freeze tenants attending the
meeting where hoping for.

Fortunately, some
affordable housing projects are making it to the market. A new
293 apartment complex in East Flatbush recently celebrated its
opening. The project is dedicated to be 100% affordable, with 183
units being dedicated to formerly homeless individuals and
families. The building also just won The Urban Land Institute’s
2018 Excellence in Affordable Housing Development.

In other news, what was expected to be the biggest test of
cryptocurrencies in real estate so far appears to have fallen
apart. The Initial Coin Offering, tied to purchasing the historic
Plaza Hotel, which was formerly owned by President Trump for $675M
does not seem to be attracting enough investors according to
Business Insider.

Bad news for hotel developers. The
New York City Planning Commission is blazing ahead with new
rules that would limit the ability to build in industrial areas.
Both sides have very different opinions on the impact of these
developments. Some claim they have stolen jobs and opportunities
from those without college degrees. Others point to the data which
shows all the jobs and income developments like these have
created.

For those looking to score themselves a notable property this
month, it’s worth checking out the William Lescaze house.
Considered the first modern home in New York City, the renovated
and restored townhouse is asking $5M. For those looking for
spending more, another of Lescaze’s architectural designs went on
the market last year for $20M. The Two family property next door is
up for sale for an even cheaper price tag of just $3.95M.

Now, if you thought the
NY property tax situation was already bad, those over in
Suffolk County, Long Island could be hit far worse in the coming
months. Neighboring
Nassau County is reassessing all residential and business
properties at their new high values. While Suffolk County residents
are about to start dealing with new groundwater pollution and
sanitation targets. An estimated 75% of properties in the county
are not connected to the public sewer system. New units to manage
the negative impact cesspools are having on the local water system
could cost $20,000 each, plus ongoing maintenance. That may be at
least 50% funded by new taxes to offer residents loans to buy
them.

In terms of the changing season impacting the real
estate market...

The weather has not been kind to the region this winter, with a
seemingly endless strong of nor’easters rolling through. By the
time they settle down, we'll be rolling right into the 2018
Atlantic Hurricane season which is also expected to be more active
than normal.

This storm activity may show up in some slightly dampened sales
and leasing figures over the next few months. It is important to
keep in mind that these numbers may be more the result of the
difficulty in getting out to view property in bad weather, and
delays in closings, rather than any reflection of demand for homes,
condos, and development sites in Manhattan and Brooklyn.

Property Tax Adjusters limited on Long Island reminds us that
this is a more important year than ever to appeal property tax
assessments and bills. Deadlines for filing some state and local
property taxes and appeals may have been slightly extended this
year due to the storms, new tax bill, and the number of property
owners expected to file appeals. Check the appropriate deadlines
for your county to see if you still have time.

As we move through spring to the busiest time of the year for
property sales, this is an important time to reinspect our homes,
investment properties and apartment buildings. Inspecting trees,
foundations, cleaning out gutters and checking smoke alarms are all
basics to be covered.

For Brooklyn Real Estate News

Brooklyn is still perhaps the hottest area of the country.
Netflix has even been on the ground shooting new film work.
DUMBO is currently working to install an urban fitness trail to
give Brooklynites a free workout, complete with workout obstacles.
The
Business Improvement District is accepting pitches for the
design which will be trialed for one year.

The City Council just paved the way for a sprawling new 8
building affordable apartment complex in Williamsburg’s
Broadway Triangle area. Out of 1,146 apartments, 287 would be
subsidized.

Of course, not all affordable housing projects turn out to be
that successful. DNA Info reports that following a lottery last
year which attracted 93,000 people to get in line for a shot at 300
units in Prospect Heights, many apartments are still empty. In
fact, 100% of some classes of units in the
Atlantic Yards are still vacant. The developers are still
looking for tenants for the studio to 3 bedroom subsidized
apartments which run from a little over $2,000 per month to over
$3,000 per month.

The old
Domino sugar factory is moving closer to bringing even more
green space and affordable apartments to Brooklyn as well. Once
complete 700 of the 2,800 new rental apartments will be designated
as affordable. The developer has also just released new renderings
for the site’s 6-acre waterfront park.

Next to Macy’s in
Downtown Brooklyn Studio Gang is developing an iconic new 51
story condo tower, with a refreshing staggered design. The building
will host 480 apartments and 55,000 square feet of outdoor and
indoor amenities. The same developer is also working on giving the
Macy’s building a facelift as well.

Other
new developments in Brooklyn which have filed or received
permits include, a 4 story, 8 unit apartment building at 898
Bushwick Ave.
253 Mother Gaston Blvd is also to get a new 16 unit apartment
building, just 5 blocks from the Atlantic Avenue subway
station.

The proposed
80 Flatbush development with 900 new apartments and 2 new
schools still continues to be protested by some, even despite
gaining overwhelming 3 to 1 backing from those voting in an online
poll.

For coffee lovers, Starbucks has announced it is bringing its
brand to Bed-Stuy.
Taking over part of the Fat Albert department store, many wonder
whether this is the next step in the gentrification of the area, an
attempt to secure cheaper labor by the big coffee brand, or just a
new place to gather and connect.

In other boroughs

The Bronx looks set to continue its rise in popularity and
investment this year. JLL Capital Markets has announced receiving a
$41.6M loan to acquire 12 rent stabilized multifamily apartment
properties in the Bronx.

New York City’s first soccer stadium also looks like it is
coming to the South Bronx. The stadium is part of a larger
mixed-use
development costing $700M. In addition to the stadium, the
development is set to include an 85,000 square foot park, 150,000
square feet of retail, 25,000 square feet of medical facilities and
550 affordable apartments.

Over in
Queens Handel Architects have released new images of what will
be the borough’s new tallest tower that will rise next to Long
Island City’s clock tower. The new 63 story tower will include a
play area, fitness center, library and coworking space.

The Winklevoss Twins’ Gemini Trust exchange for digital
currencies is expanding its offices in Midtown South, taking their
space up to 51,000 square feet.

For Landlords and Investors

If you really want to upgrade your properties, a report from the
New York Post reveals some of the
high-end materials being built into New York City
Properties.

They include:

Numidian marble

Swarovski crystal encrusted wallpaper

24 karat and gold leaf ceilings

Wood from recycled vintage wine barrels

The one big issue now is that many Brooklyn and NYC real estate
owners, renters and investors are just getting tired of the high
prices and even higher taxes. They see how high the market is now,
and see it as a good time to move, or at least their capital
somewhere else.

For New York landlords dealing with vacancies, there are always
creative solutions. It could just be a matter of deploying the
right broker to handle things. It could be Airbnb or opening up
basement apartments for extra rent. Or it could be partnering with
corporations for corporate
rentals.

Some are investing in and moving
to California and Florida for the weather. Many others are
moving
to Ohio cities like Cincinnati and Cleveland in order to get
far more home for their money and to get started acquiring rentals
properties.
CNBC says that over 800,000 people from California and New York
are about to flee new higher taxes.

In conclusion...

It has been a busy quarter in the New York real estate market
already. Big players, buyers, and developers haven’t been shy. In
fact, we continue to see new plenty of new projects coming onto the
market. Rents have been blown around by a variety of factors,
though sales appear to remain strong, and capital bullish on all
major New York boroughs.

Well, that’s it for this month’s round up. Look out for our
other upcoming reports, and check out the latest data on the
Manhattan and Brooklyn residential and multi-family market, and
which features and neighborhoods are yielding the best rents at
NewYorkMarketReports.com.

Spartan
Renovations is a leading NYC firm specializing in architectural
and engineering design, project design and management and general
contracting services.

Make sure you like and share this report, and leave your
comments on this news, or any trends you think we overlooked or you
want to hear more about in the comments section.

About the Podcast

From the Ratner Team, this is the Brooklyn Made Podcast, a show about Real Estate, Entrepreneurs, Businesses and the professionals behind one of the hottest real estate markets in the world.
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